That’s my read as well. Years ago I came up with an idea for a sci-fi novel about this, but as with most of my ideas, I haven’t done much with it! The idea is that there are two sentient alien species: one of them is generally attractive to humans, and the other isn’t. But humans can reproduce “naturally” with the latter and not the former (because the latter are an “artificial” race anyway and their “natural” mode of reproduction involves test tubes, etc., therefore in my fictional world the Vatican rules that “artificial” means of reproduction aren’t artificial in the case of these genetically engineered beings). Many Catholics naturally dislike this ruling, and the novel (if I ever write it as planned) focuses on a papal emissary who is sent out from Earth to investigate the dissent over this issue found on a particular planet where the three species live together. The situation is complicated by the facts that many humans are prejudiced against all aliens and see the Vatican’s ruling as supporting their hatred, and that the alien race with whom humans aren’t allowed to intermarry are experiencing a revival of their traditional “pagan” religion.
There’s perhaps a bit too much of Orson Scott Card in this idea (I came up with it when I was reading a lot of his work), but someday I want to have a serious go at writing it down!
Edwin